small-cap selectivity - Oil and Gas Investor

Transcription

A supplement to:
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Editor-In-Chief
LESLIE HAINES
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HIGHER VISIBILITY
igher visibility, in the lingo of equity analysts, usually makes for better stock
price appreciation—and in this case, we mean more than visibility of better
production and earnings to come in 2007. We also mean being visible to
investors’ eyes.
By virtue of being more visible, and by offering production growth, these companies
are breaking out of the pack of the dozens of companies vying for attention.
Each year we are pleased to introduce you to several small-cap and medium-sized
exploration and production companies that are worth a closer look. True, these names
may be known to you. But after building their asset portfolios in the past two or three
years, they are poised to boost their oil and gas production this year and beyond. They
represent intriguing investment opportunities.
We start with our traditional interview with three equity analysts who provide their
opinions on the industry as a whole, and we learn which E&P companies they favored
at press time, and why.
We follow with snapshot profiles on the companies that in the past year either went
public or graduated from the OTC or Nasdaq to the larger, more liquid American and
the New York stock exchanges. In every case, they are now much more visible as their
trading volumes increase, more analysts cover them, and their chief executives speak
more often at investor forums.
Finally, we summarize a report from Coker & Palmer Investment Securities that
compares the growth trajectories of four E&P companies, based on their acreage positions in key plays, their drilling plans, estimated reserves per well and their projected
production to 2010.
All in all, you will find several investment ideas to chew on.
H
Associate Publisher
SHELLEY LAMB
Regional Sales Manager
BOB McGARR
Regional Sales Manager
KAREN DAUGHERTY
Advertising Director - Consumer
LINDA LUNN
Hart Energy
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KEVIN F. HIGGINS
Executive Vice President
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Chief Executive Officer
RICHARD A. EICHLER
Copyright 2007, Oil and Gas Investor/
Hart Energy Publishing LP, Houston, Texas.
Cover photo by Lowell Georgia
—Leslie Haines, Editor-in-chief
TABLE OF CONTENTS
READY TO SPAWN UPSTREAM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Three top upstream analysts believe many small-cap E&P stocks are
poised for strong market gains in 2007.
SPEAKING E&P . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
These are definitions of some of the key terms used in oil and gas
companies’ investor presentations.
HUNTING GROUND . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Meet four E&P firms positioned for growth that command new attention
by listing on the American Stock Exchange.
MEET AND GREET . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Here’s a quick snapshot of some of the energy companies that took a ticker
on the New York Stock Exchange in 2006.
SMALL-CAP SELECTIVITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
These analysts foresee production growth for these four E&P companies.
UPSTREAM STOCKS TO WATCH . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
www.oilandgasinvestor.com • February 2007
1
ANALYSTS’ PERSPECTIVE
READY TO SPAWN UPSTREAM
Three top upstream analysts believe many small-cap E&P stocks are poised for strong market
gains in 2007.
INTERVIEWS BY BRIAN A. TOAL, Senior Financial Editor
ost E&P analysts will tell
you
they’re
bullish
about the outlook for
commodity prices in 2007, particularly for natural gas.
“The fundamentals look good
for the upstream sector,” says one
market seer.
With only a modest 1% growth
in natural gas supply in the rapidly maturing Lower 48, a likely
decline in natural gas imports
from Canada and an expected
3% year-over-year growth in gas
demand in the U.S., we’re likely
to see in 2007 sustained gas
prices in the range of $7 to $8 per
thousand cubic feet.
That’s good news for the stocks of
small-cap E&P companies—those
with market caps under $2 billion.
Why? Since those companies are
typically starting from a smaller
production and reserve base than
their larger-cap brethren, they’re
more leveraged to percent gains in
output, asset base, earning and
cash flow and hence, stock-price
appreciation.
But the annual dilemma for
investors is where to turn upstream
to find those minnows whose stocks
are likely to make a big splash as
the year wears on and gas supply/demand fundamentals tighten
further.
To find out which small-cap
E&P stocks are prepared to spawn
upstream in 2007—in terms of
making major market strides—
Oil and Gas Investor recently visited with three top analysts focused
on the smaller fish in the oil-patch
pond.
They are Eric Hagen, principal and senior E&P analyst for
First Albany Capital in Denver;
M
2
Irene Haas, principal and E&P
analyst for Canaccord Adams in
Houston; and Michael Scialla,
vice president, equity research
and senior E&P analyst for A.G.
Edwards & Sons in Denver.
Investor Eric, what
is your top small-cap
pick?
Hagen Bill Barrett
Corp., a Denver
producer operating
throughout the Rockies. It has notable
production and reserve growth coming Eric Hagen of
from its West Tav- First Albany
aputs play in Utah’s Capital
Uinta Basin, the
Williams Fork play in Colorado’s
Piceance Basin and the Big George
coalbed-methane (CBM) play in
Wyoming’s Powder River Basin.
We believe the stock is significantly
undervalued given the company’s
growth in earnings and cash flow, which
is being driven by very strong production growth. Recently, BBG has been
trading at 5.6 times estimated 2007 cash
flow versus a peer-group multiple of 6.7.
Investor What does its production
profile look like?
Hagen We’re projecting Bill Barrett
to have grown production 32% in
2006, to 50 billion cubic feet equivalent (Bcfe) from 40 Bcfe the prior
year, and to grow output another 16%
in 2007, to 60.5 Bcfe, which we think
is a conservative estimate.
In addition, this producer has even
more significant production and
reserve value in its exploration acreage
throughout the Rockies, for which the
market is giving it no credit. This
includes its increasing exposure to the
Big George coals where it has about
250 Bcfe of unbooked reserve upside.
Besides this, the company will be
drilling
three
company-maker
prospects in 2007: the Montana
Overthrust play; the Yellow Jacket
fractured-shale play in the Paradox
Basin, which straddles Utah and
Colorado; and a basin-centered gas
play in Wyoming’s Big Horn Basin.
All these plays have 500 Bcfe to multiTcfe [trillion cubic feet equivalent]
gas-reserve potential. Success on any
one of them could substantially change
the outlook for the producer.
Investor Your second-favorite smallcap producer?
Hagen Berry Petroleum, a Bakersfield, California-based operator. It has
moved beyond its core, heavy-oil,
legacy assets in Kern County’s
Midway-Sunset Field, to a 35,000net-acre position in the Uinta Basin
and a 9,000-net-acre position in the
Piceance Basin.
Investor So this is a story of diversification?
Hagen That’s part of the value story.
The company has stated that it wants
to achieve a balanced oil and gas production and reserve mix. Currently,
two-thirds of its 80% oil production is
heavy-oil output from California; the
other third is from the Uinta Basin.
But this is also a growth story.
Berry’s Piceance holdings are in the
high-end part of the basin where
we’re seeing estimated ultimate recoverable [EUR] gas reserves of 1.5- to 2
Bcfe per well, with all-in drilling and
completion costs per well of around
$2.2 million.
Overall, we see the company’s production growing from 9.4 million barrels of oil equivalent [BOE] at year-
Breaking Out Of The Pack: Upstream Companies to Watch • Oil and Gas Investor • February 2007
end 2006 to 10.6 million BOE in
2007 as reserves move up from 146
million equivalent barrels to 158 million.
As Berry shifts toward greater natural gas production, it should begin to
see its operating costs decrease, given
that heavy oil has very high operating
costs. Thus, Berry’s full-cycle cost
structure should begin improving as
well.
Investor How undervalued is Berry?
Hagen Recently, its stock has been trading at an EV [enterprise value] /Mcfe
[thousand cubic feet equivalent] of
reserves in the ground of $2.40; comparatively, its peer group trades at an EV/Mcfe
value of $3.10.
Investor Irene, what’s your top
small-cap pick for 2007?
Haas Warren Resources, based in
New York. Currently, most of the
company’s operations are in the
Wilmington Field in the Long Beach
area of the Los Angeles Basin where it
produces oil from a waterflood project
in the Wilmington Townlot Unit.This
activity will remain the driver of
Warren’s earnings and cash flow for
2007.
However, the company, which at
year-end 2005 had proved reserves of
326.8 Bcfe, also has a 50% partnership
interest with Anadarko in the Atlantic
Rim CBM project in Wyoming’s
Washakie Basin. There it has about
800 net drilling locations with reserve
estimates of 1 billion cubic feet per
well. Once the environmental impact
statement is finalized in early 2007,
development can commence, and
Warren will have the potential to double or triple its proved reserves.
Right now, it has a very clean balance sheet, so it has plenty of debt
capacity to execute its development
plans in both the L.A. Basin and the
Atlantic Rim CBM project, the latter
of which will begin making a meaningful contribution in 2008.
Since it will eventually become a gassy
company, we expect production to rise
from 3.68 Bcfe in 2006 to 5.56 Bcfe in
2007, to 14.6 billion in 2008. What I like
about Warren’s two core assets is that
4
they’re bite-sized, that is, they would be
easily digestible by larger producers.
Investor Michael,
your top small-cap
E&P stock pick?
Scialla We like
Delta Petroleum.
This Denver-based
producer operates
mainly throughout
the Rockies—in the
Piceance, Paradox Michael Scialla
and Wind River of A.G. Edwards
basins—and to a & Sons
lesser extent onshore
the Gulf Coast.
This company is experiencing some
nice growth from low-risk development-drilling projects, particularly in
the Piceance and in Newton County,
Texas. In 2006, despite selling some
assets, it was able to grow production 15% or 16.4 Bcfe. Meanwhile,
reserves rose 29% to about 345 Bcfe.
The real investment thesis about
this company centers on the fact that
Delta has exceptional exploration
upside in three high-potential plays,
each capable of being company-makers. These are the Columbia River
Basin play in eastern Washington State
where Delta has 464,000 net acres, the
Hingeline play in central Utah where it
holds more than 100,000 net acres and
the Paradox Basin in southeastern
Utah near Colorado where it has
75,000 net acres.
Investor Define what you mean by
‘company-maker’ potential.
Scialla In the case of the Columbia
River Basin, the net unrisked reserve
potential of this play could be greater
than 5 Tcfe, net to Delta. That’s 20
times the company’s year-end 2005
proved reserves of 269 Bcfe.
Meanwhile, the company’s net
unrisked reserve potential in the
Paradox Basin is 200- to 300 Bcfe;
and in the Hingeline, an oil play,
there’s several hundred million barrels
of reserve potential.
Investor So Delta is a story of potentially explosive growth through exploration.
Scialla That’s really the reason to
own the stock. Delta has more exploration upside than any company we
follow.
Investor Irene, any Rockies producers you like?
Haas One clearly is Denver-based
Kodiak Oil & Gas. The company is
active in both the Montana and North
Dakota parts of the Williston Basin,
which provides nice cash flow. But the
big growth exploration project for
Kodiak is within the Vermillion
Basin, in the southwestern corner of
Wyoming and the northwestern part
of Colorado.
While the key player there is
Questar Corp., which has drilled a
number of successful deep wells in the
The real investment thesis about this company
centers on the fact that Delta has exceptional exploration upside in three high-potential plays, each
capable of being company-makers.
Michael Scialla,
A.G. Edwards & Sons
13,000-foot Baxter Shale play, Kodiak
has 29,700 net acres in the northwestern edge of this play. Reserves per well
range from 2- to 4 Bcfe, and we
believe the whole concept of this pressured shale will be proved in 2007. I
can easily make the case that at least
20% of Kodiak’s acreage is close
enough to the play’s core to be
prospective.
Although drilling in the area is
currently being conducted on 40-acre
spacing, there’s a lot of potential for
downspacing within the Baxter play,
and that’s key. If Kodiak is successful
in its eight- to 10-well drilling program in the play, we believe its production could jump from 580 million
cubic feet equivalent for 2006 to
about 1.8 Bcfe in 2007 and to 4.4 Bcfe
in 2008.
Hagen The reason one would buy
Kodiak’s stock is because its acreage
position is an analog to the holdings
of Questar, which has already drilled
12 wells in the play and given
investors a good idea of Baxter’s
upside reserve potential. And, since
Kodiak is a much smaller operator, it’s
getting much more leverage to the
upside of this play, even though its
current production is relatively small.
Our $8.20 price target for the stock
projects a $7 long-term gas price and
that 25% of the company’s Vermillion
acreage is prospective. Right now, the
market is giving Kodiak credit for
only 12% of that acreage being
prospective.
Investor Michael, any other Rockies
producer you like?
Scialla Denver-based Teton Energy.
Its biggest position is in the Piceance
Basin where it has a 25% interest in
6,300 gross acres, alongside Berry
Petroleum and Delta Petroleum.
Our view is that this is an under-followed and undervalued story. Although
the stock has recently traded around
$5, we believe the value of its Piceance
acreage alone is worth $6.50. That
means an investor is getting not only an
already undervalued asset, but also the
company’s other assets for free. Those
other assets include a 25% interest in
266,000 gross acres near the
Nebraska/Colorado border of the
Denver-Julesburg Basin where its partner, Noble Energy, has drilled 17 successful wells in the shallow Niobrara
gas play. Teton also has a 25% interest
in 90,000 gross acres in the Williston
Basin, in the North Dakota portion of
the Bakken play.
For 2007, we’re looking for 300%
production growth, to 2.9 Bcfe, up
from 620 million in 2006, while
proved reserves could climb to 83
Bcfe from 43 Bcfe—all this largely
from low-risk, development drilling
in the Piceance.
So, this is a story of exceptional
growth at a discounted valuation.
Recently, Teton has been trading at
about 53% of our estimated net asset
value [NAV] for the company versus a
peer-group average NAV of 121%.
5
Company
Avg. 2006/
2007 EPS
Estimates ($)
Avg. 2006/
2007 CFPS
Estimates ($)
Recent
Price ($)
12/19/06
Avg. Target
12-Month
Price ($)
Berry Petroleum
2.74/2.08
6.26/5.07
31.54
44
1.07/1.26
5.34/6.06
29.11
41
(0.34)/(0.38)
1.21/1.71
24.56
36
(0.24)/0.14
0.28/0.91
2.30
5
0.61/1.51
1.62/3.76
39.72
61
(0.02)/0.03
0.03/0.08
4.30
7.10
0.07/0.16
0.58/0.78
6.95
12
(0.38)/(0.29)
(0.29)/0.27
4.95
10
0.12/0.77
0.26/1.13
12.12
24
(NYSE: BRY )
Bill Barrett Corp.
(NYSE: BBG)
Delta Petroleum
(Nasdaq: DPTR)
Endeavour Int’l.
(Amex: END)
GMX Resources
(Nasdaq: GMXR)
Kodiak Oil & Gas
(Amex: KOG)
NGAS Resources
(Nasdaq: NGAS)
Teton Energy
(Amex: TEC)
Warren Resources
(Nasdaq: WRES)
These stocks are among those cited as favorites for 2007 by upstream analysts.
Investor Irene, any other small-cap
favorites?
Haas Houston-based Endeavour
International, a producer focused
exclusively on the U.K. and Norwegian
sectors of the North Sea. Since 2005, it
has acquired an interest in more than 10
million acres and a drilling inventory of
more than 40 prospects.
Although it got off to a rough start
in 2005, drilling four dry holes in the
U.K. sector of the North Sea, it drilled
two successful wells the following
year.
Then in late 2006, the company
bought $400 million worth of North
Sea assets from Talisman Energy. This
purchase provides Endeavour a stable
base of about 10,000 barrels per day of
output for 2007 and 2008.
Importantly, the production will generate quite a bit of cash flow that will
allow the company to finance its future
exploration and development programs, as well as to pay down debt.
We’re looking for the company’s cash
flow to move up from $31 million in
2006 to $141 million in 2007, $150 million in 2008 and about $199 million in
2009. Endeavour’s earnings, meanwhile,
should grow from breakeven in 2006 to
$15 million this year, $50 million in
6
GMX Resources ia a story
of hyper-growth in the East Texas
Cotton Valley unconventional-gas play
where the company has close
to 18,000 net acres.
Eric Hagen,
First Albany Capital
2008 and $67 million in 2009.
One important aspect of Endeavour’s story that the market isn’t really
appreciating at this point is the quality of its exploration team on both
sides of the Atlantic. Bill Transier, the
ex-chief financial officer of Ocean
Energy, and John Seitz, the ex-chief
executive officer of Anadarko, founded
the company.
As we see it, this is both a growth
and value story, that is, at $2 per
share, an investor is getting a lot of
growth potential at a reasonable price.
Investor Eric, what other small caps
do you like?
Hagen GMX Resources, based in
Oklahoma City. This is a story of hypergrowth in the East Texas Cotton Valley
unconventional-gas play where the company has close to 18,000 net acres. The
play has benefited hugely from slickwater fracs and multi-stage completions.
As a result, well performance there, in
terms of EUR reserves per well, has
risen from 800 milion equivalent to 1.4
Bcfe.
Investor What about GMX’s specific
growth in the play?
Hagen Its production has risen from
1.2 Bcfe in 2004 to 2.2 Bcfe in 2005,
and we’re projecting 4.4 Bcfe for 2006
and 10 Bcfe for 2007. This is, in part,
due to that the company has gone
from two rigs in the play to a projected seven for 2007.
What’s also going to be a big factor
for GMX in the play is horizontal
drilling. The company and its partners
have several horizontals planned for
first-quarter 2007. With this technology and average gas prices of $6, one is
looking at a 20% rate of return per well.
Investor Is this a reasonably priced
stock?
Hagen Some small operators like
GMX might look expensive on a
cash-flow basis, but when one factors
in reserve and production growth
going out two to three years, the current valuations look not only reasonable, but also attractive.
Investor Any other favorites?
Hagen NGAS Resources, an operator in the Big Sandy Field in the eastern Kentucky portion of the
Appalachian Basin where it has
200,000 net acres, most of which are
undeveloped.
This is more of a value story based
on comparable M&A transactions and
NAV. For instance, the stock is trading
at only 80 cents per Mcfe based on
proved and probable reserves—and
we’re giving the company credit for 300
Bcfe of unbooked reserves out of
potentially 500 Bcfe in the Appalachian
Basin.
If one looks at NGAS as an acquisition comparable, that is, to what producers like Chesapeake Energy Corp.
would pay on a blended basis of proved
and probable reserves in this basin,
that value equates to $1.10 per Mcfe.
In short, the company is trading at a
20% discount to what someone would
pay for it in an M&A transaction.
We see this producer’s production
growing from 1.8 Bcfe in 2005 to 2.8
Bcfe in 2006, and moving up another
50% in 2007 based on drilling in the
Big Sandy where both Chesapeake and
Equitable Resources are active.
We also believe the company is interested in pursuing horizontal drilling in
the region. The reason: a typical
Devonian Shale well in this basin produces 150,000 to 200,000 cubic feet of
gas per day. If an operator can drill a
horizontal well that produces 2 million
cubic feet per day, as Cabot Oil & Gas
recently did, that’s a 10-fold improvement in output. •
*Note: Analysts’ comments are as
of mid-December 2006.
E&P TERMS: GLOSSARY
SPEAKING E&P
These are definitions of some of the key terms used in oil and gas companies’
investor presentations.
M is the Roman numeral for a thousand. So, production of 67 Mcf of gas
per day is 67,000 cubic feet.
MM represents a million in the
Roman-numeral system, so production of 67 MMcf of gas per day is 67
million cubic feet.
B represents a billion, thus production of 67 Bcf of gas per day is 67 billion cubic feet.
T represents a trillion, so proved
reserves of 2 Tcf of gas are 2 trillion
cubic feet of gas.
Bbl represents a barrel. Production
of 80 Mbbl of oil per day is 80,000 barrels.
Cf represents cubic feet and is usually the measurement of natural gas.
Cfe represents cubic feet of gas
equivalent. It is usually the measurewww.oilandgasinvestor.com • February 2007
ment of the mathematical combination of natural gas and oil or gas liquids. The conversion is usually 10,000
or 6,000 cubic feet of gas per one barrel of oil or gas liquids. (The ratio
usually reflects the recent market
value of 1 Mcf of gas in comparison
with 1 barrel of oil or gas liquids.)
Thus, 10 MMcfe is 10 million cubic
feet of gas equivalent. If the true mixture is 50% natural gas and 50% liquids (oil or gas) and the mathematical rate is 10:1, then 10 MMcfe consists of 5 MMcf of gas and 500 barrels
of oil or gas liquids.
BOE is barrels of oil equivalent. It
is usually the measurement of a
mathematical combination of natural
gas and oil or gas liquids. The conversion is usually 10,000 or 6,000 cubic
feet of gas per one barrel of oil or gas
liquids. Thus, 10 MMBOE is 10 million barrels of oil equivalent. If the
true mixture is 50% natural gas and
50% liquids (oil or gas) and the conversion rate is 10:1, then 10 MMBOE
consists of 500 Bcf of gas and 5 million barrels of oil or gas liquids.
Cf/d is cubic feet of gas per day.
Another abbreviation of this is cfpd.
Bbl/d is barrels of oil per day or
barrels of gas liquids per day.
Another abbreviation is bpd.
NGLs are natural gas liquids and
these are usually measured in barrels
rather than in cubic feet.
Btu is a British thermal unit and is a
measurement of stored energy, primarily used to describe the heat content of
natural gas. •
7
AMEX-TRADED OPPORTUNITIES
HUNTING GROUND
Meet four E&P firms positioned for growth that have commanded new attention by listing on the
American Stock Exchange.
BY GARY CLOUSER, Contributing Editor
hanks to high commodity prices
in 2005 and 2006 that led to
greater investor interest in the oil
and gas industry, the stocks of many
well-known, large-cap E&P companies
have surged during the past two years.
But beyond the household names such
as Apache, Devon Energy and XTO
Energy, where do investors find less
well-known names that may represent
good values?
Hundreds of small- and midcap E&P
companies are vying for investor attention. How should investors narrow their
search?
Many of the less visible names have
been fine-tuning their asset portfolios,
raising capital and preparing for growth.
Some have grown dramatically
already—enough to justify graduating to
a listing on the American Stock
Exchange. The Amex, meanwhile, has
been aggressively recruiting in this
industry sector as well.
The Amex has added 20 oil and gas
companies to its listings since January
2003, and as of November 30, 2006, had
49 such listings.
Illustrating the variety of investment
opportunities that populate the E&P
sector on Amex, include these four
companies: Aurora Oil & Gas,
Evolution Petroleum, BPI Energy and
Transmeridian Exploration. Aurora is
focused on shale plays in Michigan,
Indiana and Kentucky. Evolution uses
technical advances in enhanced oil recovery, stimulation and completions to get
additional production from mature fields.
BPI’s focus is coalbed-methane (CBM)
production in the Illinois Basin.
Transmeridian’s activity is in Kazakhstan.
T
AURORA OIL & GAS
Previously known as Cadence Resources,
Traverse City, Michigan-based Aurora
Oil & Gas began trading on the Amex in
8
May 2006 as AOG.
The Amex listing
was a milestone for
the company, says
William Deneau,
president. “We believe the exchange
listing will provide
the company and
its shareholders a William Deneau
number of benefits, President
such as increased Aurora Oil & Gas
visibility in the
financial community, greater liquidity of
our stock and a larger potential investor
base that includes those who cannot
invest in non-exchange-listed securities.
This facilitates recognition by the broader market and creates growth opportunities for our company and our investors,”
he says.
Aurora is focused on unconventional
natural gas exploration, acquisition,
development and production with its
main operations in the Michigan
Antrim Shale, and the New Albany
Shale of Indiana and western Kentucky.
For third-quarter 2006, revenue
increased 173% to $5.6 million from
$1.9 million during the same period a
year earlier, and production was 686
million cubic feet equivalent of gas,
averaging 7.4 million equivalent per day.
For the 18 months ending December
31, 2007, the company expects to
increase its proven reserve base from
103 billion cubic feet (Bcf ) to about 285
Bcf with a capital budget of at least
$136 million to drill or participate in
more than 300 net wells (more than 500
gross wells).
Guidance during the third-quarter
conference call indicated daily production would average about 8 million
cubic feet in the final quarter of 2006.
(Results had not been reported at
press time.)
Aurora plans to build on “two compelling shale plays at different stages
of development.” These are the
Antrim, which is in the development
stage, and the New Albany play, which
is as an early-stage development project. Company estimates show that its
Antrim acreage consists of 1,260 locations with 630 Bcf equivalent (Bcfe) of
net potential, from which 228 net
wells will be drilled in the 18 months
ending December 31, 2007, at an estimated drilling and completion cost of
$74 million.
“We believe that our position in the
New Albany Shale is the largest of any
operator in that play,” Deneau says.
To date, Aurora operates eight wells in
the play and will perform resource
assessments in several other locations.
Aurora projects 0.9 to 1.3 Bcf of proven
reserves per well.
Deneau says the New Albany has
shown encouraging results from the first
14 producing wells, validating its
assumptions about the shale. Company
estimates show that its New Albany
acreage consists of 1,405 locations
with 1.5 trillion cubic feet equivalent
of net potential, from which 52 net
wells will be drilled in the 18 months
ending December 31, 2007, for an
estimated drilling and completion cost
of $44.5 million.
As of September 2006, acreage estimates were: Antrim Shale, 133,405 net
acres; New Albany Shale, 458,916 net
acres; and other, 41,029.
In July 2006, Aurora purchased an oilservice company, Bach Enterprises, a
second-generation, family-owned business, which Aurora cites as an industry
leader in the development of oilfield
technologies, including low-pressure
carbon dioxide (CO2) removal, electric
componentized compression, tankless
water disposal and water-evacuated
sump inflow systems—all of which have
been used by Aurora to increase efficiencies and reduce production costs.
“This strategic acquisition of Bach
Enterprises ensures our ability to do
business without interruption in our
drilling and production programs. We
have had a long-standing relationship
with the Bach family, and they have
played a large part in the technological
innovations we have made in our production processes. Being able to guarantee access to services is critical to our
ability to execute the business play,”
Deneau says.
EVOLUTION PETROLEUM CORP.
Formerly known as Natural Gas
Systems Inc., this Houston company
began trading on the Amex in July
2006 as EPM. It focuses on acquiring
and developing bypassed oil and gas
utilizing modern technology. A new
CO2-flood project in Louisiana holds
its greatest potential.
“We look for oil and gas fields that
were discovered, developed and
matured prior to the current level of
technology and commodity prices,”
says Bob Herlin, co-founder and chief
executive. He formed the company in
2003 with Cagan McAfee Capital
Symbol
Company Name
AEZ
AOG
SNG
CNR
KAZ
LNG
MCF
END
GSX
GST
GEL
GGR
GW
IMO
IOC
JDO
KOG
MWE
MWP
RTK
TGA
TMY
UPL
WLB
WHT
American Oil & Gas Inc.
Aurora Oil & Gas Corp.
Canadian Superior Energy Inc.
CanArgo Energy Corp.
BMB Munai Inc.
Cheniere Energy Inc.
Contango Oil & Gas Co.
Endeavor International Corp.
Gasco Energy Inc.
Gastar Exploration Ltd.
Genesis Energy LP
GeoGlobal Resources Inc.
Grey Wolf Inc.
Imperial Oil Ltd.
InterOil Corp.
JED Oil Inc.
Kodiak Oil & Gas Corp.
MarkWest Energy Partners LP
MarkWest Hydrocarbon Inc.
Rentech Inc.
TransGlobe Energy Corp.
Transmeridian Exploration Inc.
Ultra Petroleum Corp.
Westmoreland Coal Co.
Westside Energy Corp.
Partners, a merchant bank based in
Cupertino, California.
“We are particularly interested in
opportunities that have been neglected
by industry due to perceived notions of
low margins. These opportunities generally don’t have the high upside potential
of exploration, but also don’t have the
related higher risks associated with dry
holes,” he says.
Evolution pursues three initiatives:
enhanced oil recovery for using miscible
and immiscible gas flooding, technology-based redevelopment of old oil and
gas fields, and unconventional gas reservoir development using modern stimulation/completion technologies.
“We look for opportunities to
employ technologies where we have
particular expertise such as horizontal
drilling, innovative completions and
our proprietary artificial lift process,”
Herlin says.
As of June 30, 2006, the company
listed its proved reserves as 465,000 barrels of oil equivalent (BOE) and probable reserves of between 11.5- and 16
million BOE.
Its largest project to date is in the
13,636-acre Delhi Field in northeastern
Louisiana. Evolution acquired Delhi for
$2.8 million in 2003 and implemented a
$2.7-million program of recompletions, re-entries and
offset drilling to substantially increase
production.
In June 2006, the
company sold a
farm-out of its working interest in the Bob Herlin, CEO
field to Denbury Evolution
Resources Co. for Petroleum Corp.
$50 million in cash
and Denbury’s financial commitment to
complete, at its sole cost, a CO2 EOR project in the Holt Bryant Unit within the
field. Evolution retained a 7.4% royalty
interest and a 25% back-in working interest (20% net revenue interest) in the unit
plus a 25% working interest in certain
depths outside the unit.
With the Holt Bryant Unit having
already produced about 190 million
barrels of oil from reservoirs between
2,900 and 3,400 feet through primary
and secondary recovery methods, the
Delhi CO2 EOR project is believed to
have probable gross oil reserves of up
to 16% of the estimated 400 million
barrels of original oil in place, Herlin
says. “That potential recovery gives
rise to Evolution’s estimate of 11.5- to
Price ($)
Market Value ($MM)
Symbol
Company Name
7.18
3.30
2.13
1.25
5.08
31.50
23.58
2.26
3.25
2.22
19.80
8.427
6.50
38.50
27.69
3.16
4.20
58.00
44.40
3.95
5.10
3.61
52.75
22.00
1.72
292.0
340.1
261.0
296.8
230.1
1,695.2
348.7
185.6
228.4
394.6
270.7
528.3
1,200.0
38,435.4
891.9
48.8
314.5
322.4
916.0
502.6
304.6
319.3
8,202.9
198.1
27.1
ABP
AE
AEN
BRN
BPG
CFW
CKX
DNE
ENY
EPM
FPP
GAX
HEC
HGO
MCX
MXC
PHX
PRC
PRB
PYR
PDO
SCU
TGC
TEC
TIV
Abraxas Petroleum Corp.
Adams Resources & Energy Inc.
Austral Pacific Energy Ltd.
Barnwell Industries Inc.
BPI Energy Holdings Inc.
Cano Petroleum Inc.
CKX Lands Inc.
Dune Energy Inc.
EnerNorth Industries Inc.
Evolution Petroleum Corp.
FieldPoint Petroleum Corp.
Galaxy Energy Corp.
Harken Energy Corp.
Houston American Energy Corp.
MC Shipping Inc.
Mexco Energy Corp.
Panhandle Royalty Co.
Petro Resources Corp.
PRB Energy Inc.
PYR Energy Corp.
Pyramid Oil Co.
Storm Cat Energy Corp.
Tengasco Inc.
Teton Energy Corp.
Tri Valley Corp.
Price ($)
Market Value ($MM)
3.97
29.69
1.86
22.99
0.55
4.94
13.50
2.48
0.68
2.29
2.28
0.25
0.55
7.15
10.31
6.76
18.61
2.77
3.95
0.99
4.30
1.40
0.85
4.99
9.41
180.2
127.8
34.1
183.8
42.5
109.6
28.1
152.0
3.2
66.4
19.5
19.9
124.6
162.2
97.1
12.2
157.7
53.3
29.1
38.4
16.4
106.6
52.5
64.4
191.4
These 49 companies are energy listings on the Amex, including 20 new ones since January 2003.
10
16 million BOE of probable reserves
net to our royalty interest and afterpayout working interest.”
Denbury will install and operate the
CO2 flood. It is the dominant operator
of CO2 oil recovery projects along the
Gulf Coast, with numerous projects
under way in nearby oil fields in
Mississippi that use its proven reserves
of naturally occurring CO2 found in
northwest Mississippi, about 90 miles
east of Delhi Field.
“As of September 30, 2006, following
the sale of the farm-out, we had a minimum of $28 million in after-tax cash
resources, proved reserves in our Tullos
Field area and no debt,” Herlin says.
“We are using our cash resources to
seed development projects in all three
of our initiatives and have already
begun leasing activity.”
Evolution’s farm-out of Delhi accelerated the transition of the company’s focus to
new development projects in Louisiana,
Texas and Oklahoma. One example is in
Tullos Field, where Evolution acquired a
100% working interest in more than 150
producing and 90 nonproducing oil wells
in shallow Wilcox production in northcentral Louisiana.
Evolution is working to boost oil
production by installing new waterdisposal capacity, returning wells to
production and deploying a new completion method that, if successfully
applied, could enable recovery of substantial volumes of bypassed oil. Other
projects in the leasing or planning
stage include horizontal drilling in
existing fields in Texas and an unconventional gas development play.
“We are expanding our operating
team to exploit active development
projects and expect to be drilling
again in the third calendar quarter of
2007,” Herlin says. “Revenues from
our current projects, when implemented, should fill in nicely over the
next few years while the Delhi CO2
flood is being installed. We believe
that the Delhi project will start first
CO2 injection in 2008, with initial
production response expected shortly
thereafter.”
BPI ENERGY
BPI Energy Holdings Inc. of Solon,
Ohio, owns an operating subsidiary,
BPI Energy, that focuses on CBM
production from the Illinois Basin. It
began trading on Amex as BPG in
December 2005.
It has the largest position of any
operating company pursuing coalbed
methane in the Illinois Basin—an
area covering 60,000 square miles in
Illinois, southwestern Indiana and
northwestern Kentucky, it reports.
BPI controls about 500,000 acres and
has three pilot projects in various
stages there.
“The Illinois Basin is about 10
times the size of the San Juan Basin
and is the largest undeveloped CBM
opportunity outside of the Rockies,”
says president and CEO James
Azlein. He has 20 years of experience
in project development and management and has headed BPI since 2001.
For many industry observers, the
company jumped onto the radar
screen in May 2006 when James
11
AMEX LIKES ENERGY
Stock Exchange is the leading exchange for value for both management and shareholders,” McGonegal
Theoil American
and gas companies, says John McGonegal, senior vice says. “Amex is the only exchange that trades equities,
president, Amex Equities Group. Oil and gas companies
make up 82% of the exchange’s energy listings and 94% of
their market cap. The number of energy company listings
accounts for 12% of the Amex’s total for all industries and
38.8% of the market value of all Amex-traded companies.
McGonegal as well as Bruce Poignant, who has been
assigned to the oil and gas sector, frequent industry conferences and seminars as they seek to tell their story and entice
still more companies to join the exchange. They are frequent
visitors to the oil patch.
“Most publicly traded companies do not have multibillion-dollar market caps, multi-million shares traded daily
and constant investment banking activity. For those firms,
the Amex can fill a niche and partner with them to build
Craddock, who had served as chief
engineer for Burlington Resources
Inc., joined BPI as senior vice president and chief of operations.
Burlington was a CBM leader before
being acquired by ConocoPhillips.
Now, BPI plans to drill between 58
and 123 wells during the fiscal year
that ends July 31, 2007, for an estimated capex ranging from $12- to $30
million.
“The company is pursuing additional
acreage in the basin and is contemplating joint ventures that could serve as a
catalyst,” Azlein says.
For the three months ending
October 31, 2006, (first-quarter fiscal
2007), BPI reported gas sales of 51.5
million cubic feet, up from 19.8 million in the same quarter a year earlier.
All production comes from the company’s Southern Illinois Basin pilot
project, but during the October quarter, BPI also tied in 10 new wells in its
Northern Illinois Basin pilot. These
CBM wells will take some time to
dewater before they begin to produce
natural gas.
Proved reserves, as of July 2006,
were up 43% to 14.7 Bcf from a year
earlier. Probable reserves were 3.2 Bcf
and possible reserves, 749.4 Bcf.
BPI is small and still building: its
fiscal first-quarter revenues rose 40%
to $210,000.
12
options and derivatives in the same marketplace. Our equities business guarantees all listed companies a fair and
orderly market and communicates their story to the investment community.”
Five of the 25 largest Amex-listed companies are in the
energy sector: Imperial Oil, with a market cap of $38.4 billion; Ultra Petroleum, $8.2 billion; Cheniere Energy, $1.6
billion; Grey Wolf Inc., $1.2 billion; and MarkWest Energy
Partners, $916 million.
The typical profile for an oil and gas company traded on
Amex is: average share price, $13.08; average market cap,
$1.5 billion; and average daily volume, 295,241 shares.
“Small cap” is typically defined by investors as companies
with a market cap below $2 billion. •
TRANSMERIDIAN EXPLORATION
Most E&P companies traded on the
Amex are active in the U.S., but
Transmeridian Exploration Inc. is a
notable exception that gives investors the
option to invest in an international play.
The Houston E&P company acquires
and develops oil reserves in the
Caspian Sea region of the former
Soviet Union. It primarily targets fields
with proved or probable reserves and
significant upside reserve potential in
Kazakhstan and southern Russia, but it
is pursuing additional projects in the
Caspian Sea region.
Transmeridian began trading on the
Amex in March 2005 as TMY and on
the Frankfurt Stock Exchange as TRJ.
Earl McNiel, vice president and chief
financial officer, says the company was
first listed on the Frankfurt exchange to
accommodate some early investors, who
were based in Germany. “We listed on
the Amex in order to improve liquidity
in the stock, raise our profile and
enhance access to capital. We believe we
have seen positive progress in each of
these areas,” he says.
Why the Caspian Sea focus? That
region holds 4% to 5% of the world’s
total oil reserves and is largely undeveloped or underdeveloped, says
Lorrie Olivier, chief executive. The
play also features favorable economics
relative to global peers as the full-cycle
costs in the region
average less than $5
per barrel. The region
has a favorable tax and
regulatory environment, and transportation alternatives
are expanding as existing and proposed
pipelines continue to Lorrie Olivier
expand off-take point CEO
Transmeridian
options, he adds.
Tr a n s m e r i d i a n Exploration
targets medium-size
fields with low initial entry costs,
identified reserves, significant upside
reserve potential and a quick payback
period of two to three years, which
offer the likelihood of lower-thanaverage international finding costs.
“We acquire and develop overlooked/underdeveloped assets by targeting fields too small for international majors
and too large and/or technically complicated for local players,” Olivier says.
Transmeridian’s current production is
4,100 barrels of oil a day. Olivier says the
company expects to dramatically increase
that volume. Its primary oil and gas
property is the South Alibek Field, in
which the company holds a 100%
interest through a subsidiary in
Kazakhstan. The company has a license
covering 14,000 acres and has drilled 13
wells to date. Estimates of proved
New energy listings on the Amex during the past four years.
reserves are 73 million BOE, but the
estimate of proved plus probable exceeds
200 million.
The company expects to increase the
number of producing wells from eight to
18 by the end of first-quarter 2007.
“We have some wells that produce
over 1,000 barrels of oil per day and
others that produce 200 per day.
However, with all the work we have
done, we have gained a much greater
understanding of our reservoirs,”
Olivier says.
Transmeridian believes it can more
efficiently extract the oil and maximize
return to shareholders by using lateral
completions and high-angle deviated
wells. Olivier says this is a commonly
used technique in carbonates and highly
fractured formations throughout the
world, including the Austin Chalk,
Williston Basin, North Sea and the
Middle East.
The company plans to complete all
five of the wells it is currently drilling, as
well as two existing wells it is recompleting, as horizontal or lateral wells.
Olivier founded the company in 2000
after heading the Kazakhstan and
Caspian Sea region operations for
American International Petroleum
Corp. from 1991 to 2000. With 30-plus
years of industry experience, Olivier
applies what he learned from employers.
“From Shell, I learned that you can
never apply enough technology. With
Occidental Petroleum, I learned the
importance of cash flow. With the small
companies, I learned the value of a good
story,” he says. •
13
NYSE NEWCOMERS
MEET AND GREET
Here’s a quick snapshot of some of the energy companies that took a ticker on the New York
Stock Exchange in 2006.
BY KELLY GILLELAND, Contributing Editor
aunching a successful IPO or listing on the New York Stock
Exchange might not guarantee
fame and fortune, but it’s certainly a step
in that direction. Last year saw more
than a dozen E&P-related firms take
that giant leap to join the Big Board.
The increased trading volumes make
these energy names open to more attention from different kinds of investors.
“You can trade on Nasdaq or on the
Amex, but you know you’ve reached the
peak when you make it to the New York
Stock Exchange,” says Arena Resources
president and chief executive Tim
Rochford. Last August when Tulsabased Arena graduated from the Amex
to the NYSE, it saw a “considerable
improvement in liquidity.”
“Our daily volume picked up significantly, probably by about 25% to
35%,” he says. “Needless to say, we are
very pleased.”
Arena is not alone. Houston-based
Complete Production Services went public on the NYSE last April with the
largest oilfield services IPO, says company chief financial officer Mike Mayer. “It
was definitely the highlight of our year.”
Oil prices may be down 11% since
the beginning of 2007 and the direction of gas prices is dicey, but these
newcomers to the NYSE are all fastgrowing companies.
Despite the sometimes millions of
dollars and countless hours spent fulfilling regulatory requirements, the lure of
the public offering is stronger than ever.
In 2006, nearly 200 companies from all
industries raised almost $43 billion in
IPOs, the highest amount since 2000. In
the E&P sector, some predict 2007 will
bring the highest number of IPOs to
date, as the smaller companies continue
to gain momentum.
As the oldest and largest stock
exchange, the NYSE boasts it is “the
L
14
most liquid and cost-efficient marketplace in the world.” The prestige of an
NYSE listing is “viewed as the Holy
Grail,” says one industry insider. “Listing
on the other exchanges is difficult
enough, and most small independents
don’t have the time, money or patience to
attempt [to list on the NYSE]. But that
doesn’t mean it doesn’t cross their minds.”
What follows is a snapshot of those
E&P-related companies that made the
grade last year, obtaining that coveted
NYSE listing. Each merits further
investigation for potential investment.
ARENA RESOURCES INC.
Tulsa-based Arena Resources is primarily active in the Midcontinent in
Kansas, Oklahoma, Texas and New
Mexico. Founded in 2000, its portfolio of proved reserves is about 82% oil.
“From mid-2004 to the end of fourthquarter 2006, we have focused on acquisition of some great assets with upside
opportunity,” Rochford says. “2006 was
a very good year for us. We doubled our
for $6.1 million. This increased the overall
2006 budget to $93 million. Production in
2006 doubled over 2005 levels.
Arena has identified at least 90 new
drilling locations on 20-acre spacing on
the new purchase alone.
“We now have a multi-year drilling
inventory,” Rochford says, “and have the
ability at present, even without further
acquisitions, to grow the company
organically for many years to come.”
ATLAS PIPELINE HOLDINGS LP
This holding company owns interests in
the general partner of Atlas Pipeline
Partners LP, which went public in 2000.
It is in the transmission, gathering and
processing of natural gas in the
Midcontinent and Appalachian regions.
Based in Moon Township, Pennsylvania,
the partnership owns and operates about
1,900 miles of active intrastate gasgathering pipeline, a 565-mile interstate
gas pipeline, two gas-processing plants
and a treating facility where gas and
impurities are removed.
“Our daily volume
picked up significantly, probably
by about 25% to 35%. Needless to say,
we are very pleased.”
Tim Rochford,
President and Chief Executive Officer, Arena Resources
production for the second year in a row,
and added substantial reserves to the
bottom line.”
In December 2006, Arena made its latest acquisition, of three leases in Texas’
Permian Basin, to add 4.7 million barrels
of oil equivalent (BOE) of proved reserves
Last October, the partnership
declared its initial quarterly cash distribution for the third quarter of $0.17 per
common limited partner unit, representing a pro-rated cash distribution of
$0.24 per common unit for the period
from July 26, 2006, the date of the
NYSE NEWCOMERS
partnership's IPO, through September
30, 2006. The $3.6-million distribution was paid in November to common unit-holders.
BRISTOW GROUP INC.
As the first civil helicopter company to
work in the oil and gas industry and one
of the largest helicopter firms in the
world, Bristow Group (formerly Offshore
Logistics Inc.) has earned an international reputation for response speed and highquality service. Its brand names, Air
Logistics and Bristow Helicopters, are
familiar sights in 22 countries. The company provides transportation, maintenance, search and rescue, and other types
of related services to the oil industry and
other business sectors.
The Bristow Group also offers offshore platform production management services including staffing and
on-site management of offshore facilities through its subsidiary, Grasso
Production Management.
As of September 2006, the Houston
company had $794 million in equity,
$261 million of debt, $268 million in
cash on hand and undrawn borrowing
capacity (in the form of a revolving line
of credit) of $100 million. Plans include
expanding its transportation fleet and
evaluating acquisition opportunities
that strategically fit the company’s
business model.
CNX GAS CORP.
CNX Gas Corp. is an independent gas
exploration, development, production
and gathering company operating in
the
Appalachian
Basin.
The
Pittsburgh-based company believes it
is the second-largest gas producer in
the Appalachian Basin, with 2006
production expected to be 55.7 billion
cubic feet, a 15% increase over 2005.
Proved reserves as of December 31,
2005, were 1.13 trillion cubic feet
(Tcf ). A recently completed study
identified net unproved reserves of
2.03 Tcf. More than 90% of the net
unproved reserves are economic at gas
prices of about $5
per thousand cubic
feet or less. The
company has access
to 2.44 million gross
acres, of which
640,000 remain
unevaluated.
The company
has set 2007 capex Nicholas J.
at $312 million, up DeIuliis, President
and CEO
84% from 2006.
“We continue to CNX Gas
expect at least 15%
annual growth in organic production for
2007 and beyond,” says president and
CEO Nicholas DeIuliis.
The company’s goal is annual output of more than 100 billion cubic feet
(Bcf ) by 2010.
“Achieving this would mean CNX
Gas would have more than doubled its
2005 production of 48.4 Bcf in five
years, without having made an acquisition,” DeIuliis says.
CNX’s listing process on the NYSE
15
NYSE NEWCOMERS
was a little different from most companies because it sold its shares
months earlier as part of a 144A
offering.
“The highlight, as a new company,
was to create our own identity and
establish our reputation with the E&P
industry,” DeIuliis says. “While there
are still investors who have not heard
of us, we’ve encountered fewer of them
as the year has progressed. For those
who know us, I believe we’re seen as
one of the premier midcap resource
plays in the U.S.”
in cash and about a million Complete
common shares. Complete also
assumed about $30 million in outstanding debt.
“We evaluate acquisition candidates
as they come up,” Mayer says. “We have
great opportunities for future gowth.”
Complete took a big step toward
enhancing its capital structure in
2006, with a $650-million public debt
offering.
“We have rapidly grown our business
in the past,” Mayer adds, “and we will
continue to grow through organic means
as well as strategic acquisitions.”
CONSTELLATION ENERGY
PARTNERS LLC
(Photo courtesy of Complete Production Services Inc.)
COMPLETE PRODUCTION
SERVICES INC.
Formerly known as Integrated Production Services Inc., Complete
Production is one of North America’s
leading oilfield service providers, offering all-inclusive field support, equipment and production optimization. The
company focuses primarily onshore the
U.S., but is also active in Canada,
Mexico and Southeast Asia.
“We take a two-fold approach
toward growing our company in a
meaningful way,” says senior vice
president and CFO Mike Mayer.
“One, we continually invest in new
capital in equipment to expand our
capabilities, and two, we are always
looking for acquisition opportunities
to expand our geographical reach.”
The company is no stranger to
acquisitions, making 15 such purchases last year alone. Its latest purchase,
Pumpco Services, provides pressure
pumping in the Barnett Shale play of
north Texas, as well as stimulation and
cementing services. Pumpco was purchased last November for $157.5 million
16
A rising star on the coalbed methane
(CBM) scene, Constellation was
formed by parent Constellation
Energy Group Inc. primarily to take
advantage of opportunities in the prolific Black Warrior Basin of Alabama.
The company’s chief financial officer,
Angela Minas, explains, “Our primary
business objectives are to generate stable
cash flows, allowing us to make quarterly distributions to our unit holders and,
over time, to increase the amount of
future quarterly distributions.”
The company intends to spread its
focus to include oil and gas properties
as well as related midstream assets,
and plans “accretive acquisitions of
E&P properties characterized by a
high percentage of proved producing
reserves with long-lived, stable production and step-out opportunities,”
she says.
(Photo courtesy of Constellation Energy Partners LLC)
CEP is listed on the NYSE Arca
and is enthusiastic about what the
future holds.
“In 2007, we are committed to maintaining a stable cash flow to ensure we
meet our quarterly distribution targets
for our investors,” Minas says. “We
believe that the combination of our
experience in operating unconventional
resources and the low-risk, low-cost
drilling profile of the Black Warrior
Basin will enable us to achieve that goal.”
ENERGY TRANSFER EQUITY LP
Energy Transfer Equity (ETE) of
Dallas owns the general partner of
Energy Transfer Partners (ETP) and
about 62.5 million ETP limited partner units. ETP and ETE have a combined enterprise value approaching
$20 billion.
Although ETP has been publicly
traded since the mid-1990s, ETE
joined the NYSE last year. In
December, ETE announced a $0.11per-unit increase in the annual cash
distribution paid on the partnership’s
outstanding limited partner units, to
$1.36 annually.
The two companies own and operate
a diversified portfolio of energy assets,
including gas transportation and storage
operations, intrastate gas-gathering and
transportation pipelines, gas treating
and processing assets in Texas and
Louisiana, and three gas storage facilities in Texas.
EXCO RESOURCES INC.
Dallas-based Exco Resources is
another active player onshore, focusing its E&P efforts across Appalachia,
East Texas, the Midcontinent, Permian Basin and the Rockies. As of
year-end 2005, its proved reserves
were about 445 Bcf equivalent (Bcfe)
of which 91% was gas.
Exco has made a few significant
acquisitions during the past two years,
including Winchester Energy Co.
Ltd. in 2006. It boasts assets that
include a multi-year inventory of
development drilling and exploitation
projects.
Exco’s most recent transaction
includes the sale of oil and gas properties
in Wattenberg Field in the DenverJulesburg Basin in Colorado. This sale
was concluded in early January 2007 for
nearly $132 million.
NYSE NEWCOMERS
HELIX ENERGY SOLUTIONS
GROUP INC. and
CAL DIVE INTERNATIONAL
Based in Houston, Helix joined the
NYSE in July 2006. It specializes in the
exploitation of marginal fields, including
exploration of unproven fields where it
employs its services on its own oil and
gas properties as well as providing services to the open market. The company is
a leading marine contractor and operates
offshore oil and gas properties as well as
production facilities.
In July 2006, it moved solidly into
the E&P industry when it acquired
Remington Oil and Gas Corp. for $1.4
billion, gaining 280 Bcfe of proved
reserves in the Gulf of Mexico.
“Our main strategic objective is to
achieve long-term sustainable earnings
growth, linked to a superior return on
capital,” Helix president and CEO
Martin Ferron says. “Based on the
market opportunities open to us, we
have crafted a capital allocation plan
that could generate at least 25% earnings growth in each of the next three
years. For 2007, in particular, we reallocated capital between our contracting services and oil and gas business
units to take advantage of recently
announced marine asset investment
opportunities, while achieving a more
measured, lower risk, growth in our oil
and gas production.”
It subsequently launched an IPO of
its subsidiary, Cal Dive International
Inc., late last year. Cal Dive provides
manned diving and related support
services, pipelay and pipe burial services to the offshore industry. It also owns
and operates the largest dive-support
vessel fleet, diving corps and array of
diving equipment in the world.
KAYNE ANDERSON ENERGY
DEVELOPMENT CO.
This Houston-based investment company
invests primarily in energy companies
not publicly traded. Kayne’s stated
investment objective is “to generate current income and capital appreciation
primarily through equity and debt
investments.”
The company’s operations are externally managed and advised by Kayne
Anderson Fund Advisors LLC. It
intends to invest 80% of its assets in
securities of energy companies, which
include upstream, midstream and other
energy companies.
MARINER ENERGY INC.
Houston-based Mariner Energy is fast
progressing into the E&P big leagues in
the Gulf of Mexico. The company is
active in shelf and deepwater plays, as
well as in West Texas’ long-lived
Spraberry oil trend.
After its acquisition of Forest Oil’s
Gulf of Mexico properties last year,
essentially doubling the company’s size,
Mariner says it holds 644 Bcfe of
proved reserves, about 68% gas. It
drilled 28 offshore wells last year and
brought three deepwater fields online.
The company has more than 800,000
net leased acres offshore.
Mariner sold its 20% working interested in Garden Banks Block 244, Gulf
of Mexico, to Petrobras America late
last year, resulting in a pre-tax gain of
about $22 million. The transaction took
about $21 million of projected required
developmental spending off Mariner’s
bottom line. As a result, Mariner’s projected capital spending for 2006
dropped from up to $545 million down
to between $504- and $524 million.
PENN VIRGINIA GP HOLDINGS LP
Penn Virginia GP Holdings owns three
types of equity interests in Penn
Virginia Resource Partners (PVR),
which is principally in management of
coal properties, and gas gathering and
processing, since the acquisition of a gas
midstream business from Cantera Gas
Resources in March 2005.
INFORMATION AS OF JANUARY 11, 2007
Symbol
Industry
Arena Resources Inc.
ARD
Exploration and Production
Atlas Pipeline Holdings LP
AHD
Pipelines
Issue Type
Listing
Date (2006)
Previously
Traded
P/E Ratio
EPS
Market Cap
($ billion)
Shares
Outstanding
Common Stock
Aug 31
Amex
24.47
1.54
0.57
14,659,000
Common Stock
Jul 21
0
0
0.50
21,100,000
Bristow Group Inc.
BRS
Oil Equipment and Services
Structured Product
Sep 19
0
0
0.20
4,000,000
CNX Gas Corp.
CXG
Common Stock
Jan 19
23.74
1.03
3.74
150,864,000
Complete Production Services Inc.
CPX
Common Stock
Apr 21
14.43
0
1.31
70,659,000
Constellation Energy Partners LLC
CEP
Common Stock
Nov 15
0
0
0.27
11,094,000
Energy Transfer Equity LP
ETE
Pipelines
Common Stock
Feb 3
160.53
0.19
3.78
124,361,000
EXCO Resources Inc.
XCO
Common Stock
Feb 9
0
0
1.59
104,098,000
Helix Energy Solutions Group Inc.
HLX
Common Stock
Jul 18
9.84
2.92
2.62
93,357,000
Kayne Anderson Energy Development Co.
KED
E&P Investment
Closed End Fund
Sep 21
0
0
0.24
10,000,000
Magellan Midstream Holdings LP
MGG
Pipelines
Common Stock
Feb 10
0
0
1.47
62,647,000
Mariner Energy Inc.
ME
Common Stock
Feb 21
15.01
1.21
1.59
86,365,000
Penn Virginia GP Holdings LP
PVG
Coal and coalbed
methane/midstream
Unit
Dec 5
0
0
0.78
38,425,000
Vaalco Energy Inc.
EGY
Common Stock
Oct 12
9.22
0.69
0.37
58,743,000
Venoco Inc.
VQ
Common Stock
Nov 17
0
0
0.66
42,693,000
Amex
Source: www.nyse.com
Several producers, service companies and other energy businesses found a home for their tickets on the NYSE in 2006.
17
NYSE NEWCOMERS
VAALCO ENERGY INC.
Vaalco has chosen West Africa and
the Texas Gulf Coast as its main focus
with a stated strategy of increasing
reserves and production “through a
program that balances lower risk
acquisitions and exploratory drilling
on our domestic acreage with high
potential international prospects.”
It has operated the Etame Block
offshore Gabon for several years and
has made a number of discoveries. As
production there ramps up, its firsthalf 2006 earnings per share rose 75%
over the prior year. It has also been
awarded an onshore block in Gabon.
Vaalco president Russell Scheirman
says the company is evaluating the
onshore acreage for possible drilling
by the end of the year.
The Houston-based company
joined the NYSE in October 2006
after trading on the Amex for several
years.
“We are excited to join the ranks of some
18
of the world’s
best-known companies,” says chairman and CEO
Robert Gerry.
Vaalco is expanding to other countries. Its latest
transaction includes
a production-shar- Bill Schneider
ing agreement for President
Block 05/06 off- Venoco Inc.
shore
Angola,
where the company holds a 40% share and operatorship of 1.4 million acres. Vaalco is also
awaiting word on the outcome of the
latest North Sea bid round where it
hopes to gain five blocks. Awards are
expected in the first quarter 2007.
VENOCO INC.
California Dreaming is the theme at
Denver-based Venoco, where the company has a primary focus of acquiring
interests in, and exploring for and
developing, oil and gas onshore and
offshore California. The company also
has properties in Texas that it obtained
through the purchase of TexCal Energy
LP for $456 million in the spring of
2006.
“We increased production (in
Hastings Field) almost 40% since the
acquisition in April and signed an
agreement with Denbury Resources
that we believe will lead to the CO2
flooding of the field,” Venoco president
Bill Schneider says.
The company also drilled 62 wells
last year in the Sacramento Basin.
“Our focus in 2007 will be very similar to 2006,” he says, “but activity levels should be higher, and we hope we
can leverage this to increase efficiency.”
Venoco plans to drill approximately
120 wells in the Sacramento Basin and
five to 10 in coastal California and
Texas. It has a $200-million budget for
capital expenditures for 2007. •
SMALL-CAP ANALYSIS
SMALL-CAP SELECTIVITY
These analysts foresee production growth for these four E&P companies.
BY MICHAEL BODINO, BRIAN CORALES and MICHAEL GLICK, Coker & Palmer Investment Securities
any small-cap E&P companies exhibit strong growth in
production as their plays get
drilled and more fully developed. We
have chosen to focus on four such
companies, to evaluate, compare and
contrast their acreage positions and
drilling plans. We have profiled their
production, reserves and capital expenditures (capex). As project economics
evolve or new projects impact these
companies, adjustments are made to
our roll-forward models.
The companies we studied are
Carrizo Oil & Gas (CRZO), Parallel
Petroleum (PLLL), PetroQuest
Energy (PQ) and Gulf of Mexico
operator ATP Oil & Gas (ATPG).
Although the latter is an offshore
company only, our process allows us to
effectively compare it with the other
three, which are solely onshore
resource players.
M
RESERVES DRIVE NAV
Statistically speaking, evaluation and
comparison of four small-cap North
American companies including CRZO,
PLLL, PQ and ATPG can prove to be
enlightening. Instead of simply relying
on the ultimate resource potential based
solely on acreage holdings and reserve
potential, we have modeled each company
through 2010 to determine how quickly
each company could prove up its
resource potential.
Although ATPG is not an onshore
“resource company” like the other
companies, one can still model production, capex and reserves from its
inventory of large projects.
The biggest deficiencies of our
methodology include estimating proved
undeveloped (PUD) bookings and
valuing additional potential from
other projects in the pipeline. Further,
our process allows us to focus on
whether a company’s balance sheet
20
and technical staff support the program development and acceleration.
The biggest trump card continues
to be long-term commodity prices,
although each model can be run on
myriad price decks. While we believe
the mid-cap E&P companies should
trade at a plus-or-minus 15% internal
rate of return (IRR), our small-cap
E&P price targets are all based on a
20% IRR from the 2010 proved net
asset value (NAV), predicated on $7
Nymex Henry Hub and $50 crude oil
prices (West Texas Intermediate).
Long-term investors could see 20%plus return in the small-cap stocks due
to liquidity and capital, among other
factors. We think that PetroQuest and
Carrizo offer the highest rate of return
(ROR) to investors, although Parallel
and ATP should have tremendous production growth going forward.
PetroQuest has been valued in the
market as a Gulf of Mexico company
and does not discount any future
drilling success from its repeatable
onshore plays in the Arkoma Basin and
East Texas, especially in light of horizontal drilling potential in these areas.
Carrizo’s leverage to the Fort Worth
Barnett Shale play not only gives the
company growth potential for years to
come, but also makes it a prime
takeover candidate. Additionally, it
holds 225,000 acres in other shale
plays, including the West Texas
Barnett, Floyd, Fayetteville and New
Albany shales, for which we give the
company no future reserve value.
SUMMARY RESULTS
The valuation metrics of these four
E&P companies are similar when comparing the implied IRR of today’s stock
price versus our estimated 2010 net asset
values, including ATPG, which may be
perceived to not fit the mold of a
resource company, but receives similar
ROR valuations.
Last fall, PetroQuest and Carrizo traded at a discount to ATPG and PLLL, primarily because these companies have more
years of drilling inventory left to develop.
We have also treated PQ the most
conservatively by only booking 0.25
PUD for each proved developed producing location (PDP) drilled in its
acreage plays and running its production
basically flat in the Gulf Coast region.
For the other three companies, we are
assuming reserves will continue to be
booked at a rate of 0.5 PUD for each
PDP. We apply these rules to maintain
a three-year drilling inventory for each
company, although we admit our estimates could prove to be conservative or
aggressive. Further, financial metrics
are driven by production, which is conservatively estimated as a function of
drilling capex.
Clearly, some of these companies have
additional upside beyond the roll-forwards we have mentioned here. In their
key development areas, there is ample
upside beyond 2010 as well as upside in
other project areas.
Although we modeled several project
areas, here we discuss the most important and predictable projects for each
company.
We have tried to be consistent with
our estimates on a per-company basis
regarding PUD percentages; however,
we do recognize that variations in the
number of PUD locations booked and
amount of prospective acreage are the
primary variables relating to upside
remaining beyond 2010.
In other words, it is less a question of
“if,” but more a question of “when,”
much of these reserves get booked.
This is a primary reason we believe a
discounted cash flow methodology is a
better valuation tool, albeit more challenging than just attributing value to
acreage or reserve potential.
SMALL-CAP ANALYSIS
ATP OIL & GAS
While all four companies have greater
than 35% production compound
annual growth rate, Houston-based
ATP’s production growth is estimated
to be the highest because of its large
offshore projects coming online in the
next couple of years.
ATP has continued to acquire inventory with logged pay and should bring
these projects to production over the
next few years. The company should
average greater than 300 million cubic
feet per day of production during 2009
and 2010, although it could reach these
levels earlier.
Any acceleration or better-than-anticipated recoveries of reserves would be
positive for its production and NAV.
Additional acquisitions are to be expected,
which would add to its current inventory of 1.1 trillion cubic feet of gas.
In 2006, ATP was to produce 53.7 billion cubic feet equivalent (Bcfe) from its
base Gulf of Mexico properties already
producing, plus five other fields in the
Gulf and in the North Sea. We model that
output growing to 93.9 Bcfe in 2007 as
additional production comes on stream in
both areas. For 2008, we model 98.7 Bcfe
of production; for 2009, we model 131.6
Bcfe, and by 2010, we see 113.6 Bcfe.
CARRIZO OIL & GAS
We modeled Houston-based Carrizo’s
drilling schedule in the Fort Worth
Barnett Shale through the end of the
decade. It has three net rigs drilling and
additional interests in non-operated rigs
drilling. Our estimates forecast the
drilling of one horizontal well per rig per
month, or 12 wells per rig each year.
Additionally, we assume that Carrizo
averages five net rigs in 2007 (including
Company
non-operated) and adds a rig each year
from 2008 to 2010 such that it would
average eight rigs.
Assuming the acceleration of drilling
activity stated here, Carrizo should add
significant production and reserves in
the next four to five years.
We are using industry standards for
reserve bookings in the Barnett Shale,
adding 2 Bcfe per horizontal well completed, or 1.5 Bcfe net to Carrizo. We
are forecasting 0.5 PUD locations for
each PDP well going forward, largely
because of the lack of contiguity in
Carrizo’s acreage position. This could
provide additional upside for Carrizo as
our PUD additions could prove to be
conservative. Carrizo’s PUD percentage
remains relatively low, and any increase
in PUDs could create additional upside
to the company’s NAV.
We model that in 2006, Carrizo will
have booked 99 Bcfe of PDP reserves
from the Barnett Shale play alone (about
double its 2005 reported number). By
2010, however, we model the company
having some 457 Bcfe of PDP and
another 293 Bcfe of PUDs.
Carrizo also has an additional 225,000
net acres in other shale plays, including
120,000 net acres in the Floyd Shale in
Alabama alone. We give the company no
reserve value for this acreage but with
success, could give the company additional future value.
can drill at a cost of $2 million per well.
We model one PUD well per PDP well,
and 1.5 Bcfe of net reserves per well.
Parallel’s production growth began to
accelerate significantly in 2006 and continues. We are estimating Parallel will
operate three rigs in 2007 and four rigs
thereafter. It could thus book 459 Bcfe
of proved reserves by the end of 2010,
net of production, versus about 56 Bcfe
in 2006. Should the Wolfcamp play continue to see increasing success, Parallel
could increase its NAV by accelerating
the development of the play.
PETROQUEST ENERGY
PARALLEL PETROLEUM
We analyzed PetroQuest’s East Texas
operations in terms of PDP, PUD and total
reserve additions during the next five years.
We based our assumptions on the fact that
the Lafayette, Louisiana, company has
25,100 net acres and 314 net drilling locations, which it can drill at a cost of $2 million per well. We modeled only one PUD
location for every four PDP wells and 1
Bcfe of net reserves per well.
With 25,100 net acres and 80-acre
spacing, PetroQuest would have about
314 locations to develop. Based on these
assumptions, the company could have
about 180 Bcfe of reserves in East Texas
by 2010 versus 40 Bcfe in 2005. Better
reserve recoveries, possible 40-acre
downspacing and horizontal drilling
could add upside to our estimates. Our
assumptions are based strictly on vertical
drilling to develop the acreage. •
This Midland, Texas, company also
indicates growth in production in the
future. Based on our drilling schedule
roll-forward in the Wolfcamp play in
West Texas through 2010 and our
assumptions of 55,000 net acres, the
company has 344 net well locations it
Michael Bodino, Brian Corales and
Michael Glick are energy analysts in the
New Orleans office of Coker & Palmer
Investment Securities, headquartered in
Jackson, Mississippi. This is adapted from
their report.
Production 2005A
Production 2010E
Reserves 2005A
Reserves 2010E
Carrizo Oil & Gas
9.6
48.0
150.6
887.6
ATP Oil & Gas
19.9
112.0
527.5
679.9
Parallel Petroleum
9.1
46.7
152.4
895.1
PetroQuest Energy
16.1
76.5
131.0
473.3
Source: Coker & Palmer
Company comparison in billion cubic feet equivalent. Production and reserves are to grow exponentially for these four companies.
21
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Company
St. Mary Land & Exploration Co.
Forest Oil Corp.
Petrohawk Energy Corp.
Exco Resources Inc.
Whiting Petroleum Corp.
Mariner Energy Inc.
San Juan Basin Royalty Trust
Houston Exploration Co.
Linn Energy LLC
Swift Energy Co.
Baytex Energy Trust
Penn Virginia Corp.
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Comstock Resources Inc.
Bill Barrett Corp.
Encore Acquisition Co.
Spirit Finance Corp.
Delta Petroleum Corp.
Compton Petroleum Corp.
Advantage Energy Income Fund
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Stone Energy Corp.
Goodrich Petroleum Corp.
Energy Partners Ltd.
Interoil Corp.
Eagle Rock Energy Partners LP
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Permian Basin Royalty Trust
Carrizo Oil & Gas Inc.
Venoco Inc.
Apco Argentina Inc.
Parallel Petroleum Corp.
Dorchester Minerals LP
Petroleum Development Corp.
Hiland Holdings GP LP
Warren Resources Inc.
PetroQuest Energy Inc.
Sabine Royalty Trust
Arena Resources Inc.
MarkWest Hydrocarbon Inc.
Rentech Inc.
Breitburn Energy Partners LP
Legacy Reserves LP
Hiland Partners LP
GeoGlobal Resources Inc.
Toreador Resources Corp.
The Exploration Co.
GMX Resources Inc.
Vaalco Energy Inc.
McMoRan Exploration Co.
Harvest Natural Resources Inc.
Geomet Inc.
24
Market Cap
($MM)
Debt/Equity
Price/Book
Net Profit Margin
(Most Recent Quarter)
Price/Free Cash Flow
1,900
1,870
1,840
1,640
1,610
1,590
1,440
1,420
1,320
1,300
1,290
1,270
1,260
1,250
1,210
1,210
1,200
1,150
1,120
1,100
952.400
938.130
931.910
918.990
888.050
844.880
803.010
792.830
788.790
717.770
711.540
645.940
641.080
638.780
623.830
623.240
621.350
619.670
594.290
568.590
557.030
535.750
531.030
516.430
514.820
491.920
476.660
418.080
395.640
394.130
387.700
380.720
380.570
368.110
0.242
0.779
0.738
0.735
0.818
0.485
NA
0.378
4.174
0.48
0.752
1.351
0.817
0.707
0.251
0.746
1.789
0.759
1.054
0.459
NA
0.222
0.295
0.788
0.612
0.761
2.19
1.27
0.773
NA
0.799
24.509
NA
0.859
NA
0.232
3.29
0.008
0.974
NA
0.004
10.566
0.755
0.204
0.714
0.783
NA
0.641
0.001
0.091
0.043
NA
0.213
0.203
2.763
1.327
0.971
1.399
1.391
1.252
64.833
1.479
5.525
1.719
3.182
3.369
3.133
1.908
1.638
1.525
1.334
2.637
1.751
1.06
5.761
1.865
1.139
0.902
3.962
1.983
6.967
2.536
2.129
481.25
3.42
17.8
4.429
3.733
3.609
1.736
15.22
2.099
3.171
114.706
4.88
11.802
6.926
2.091
2.496
2.873
10.843
3.11
3.121
3.024
3.33
NA
1.504
1.78
29.04
37.929
26.805
84.515
23.848
19.106
101.001
25.89
213.415
29.308
34.648
12.158
24.366
13.181
19.826
23.712
30.551
-14.411
31.857
1.19
99.752
17.291
16.745
11.984
27.793
-23.483
-6.847
9.357
2.861
99.185
23.366
21.028
76.19
37.287
61.502
313.907
-0.042
24.213
11.88
97.269
44.011
5.451
-31.561
89.842
79.941
6.527
NA
20.352
29.604
33.747
53.003
-30.767
NA
26.427
-29.858
-109.021
3.218
-32.978
-23.604
-34.673
NA
-8.501
42.658
-65.948
79.314
-17.967
66.629
-29.157
-23.152
-74.624
33.705
-20.401
-20.434
79.03
NA
-17.648
-49.225
-4.614
-12.678
-10.442
-12.63
NA
12.616
NA
-12.225
-35.815
76.372
-15.474
54.926
-1.737
NA
-74.51
-42.385
NA
-30.492
52.642
168.139
NA
-80.025
113.351
-116.499
NA
-22.523
-195.001
263.385
-10.185
-7.529
-7.352
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Enterra Energy Trust
Clayton Williams Energy Inc.
Gastar Exploration Ltd.
ERHC Energy Inc.
Contango Oil & Gas Co.
North European Oil RT
Aurora Oil & Gas Corp.
Kodiak Oil & Gas Corp.
Edge Petroleum Corp.
TransGlobe Energy Corp.
Constellation Energy Partners
Transmeridian Exploration Inc.
Cross Timbers RT
Brigham Exploration Co.
Callon Petroleum Co.
Meridian Resource Corp., The
Endeavour International Corp.
Energy Infrastructure Acqstn
CanArgo Energy Corp.
Sulphco Inc.
Canadian Superior Energy Inc.
Gasco Energy Inc.
American Oil & Gas Inc.
Tri-Valley Corp.
FX Energy Inc.
Double Eagle Petroleum Co.
PrimeEnergy Corp.
Santa Fe Energy Trust
Dominion Resources Black Warrior
Barnwell Industries Inc.
Cano Petroleum Inc.
Eastern American Natural Gas
Panhandle Royalty Co.
Abraxas Petroleum Corp.
NGAS Resources Inc.
Dune Energy Inc.
Credo Petroleum Corp.
Harken Energy Corp.
EV Energy Partners LP
Williams Coal Seam Gas RT
Mesa Royalty Trust
Far East Energy Corp.
Bolt Technology Corp.
Storm Cat Energy Corp.
Zion Oil & Gas Inc.
Isramco Inc.
Teton Energy Corp.
National Energy Group Inc.
Torch Energy Royalty Trust
LL&E Royalty Trust
Petro Resources Corp.
Magellan Petroleum Corp.
Infinity Energy Resources Inc.
Marine Petroleum Trust
Tel Offshore Trust
Tengasco Inc.
Spindletop Oil & Gas Co.
BPI Energy Holdings Inc.
Austral Pacific Energy Ltd.
Hallador Petroleum Co.
American Energy Group Ltd.
JED Oil Inc.
PYR Energy Corp.
Blue Dolphin Energy Co.
Sky Petroleum Inc.
Market Cap
($MM)
Debt/Equity
Price/Book
Net Profit Margin
364.400
349.030
327.920
316.360
313.160
313.030
310.220
305.130
285.280
278.150
277.910
274.470
272.280
271.800
268.680
265.640
260.470
258.610
258.470
254.000
230.320
223.520
217.080
209.740
207.460
201.990
193.490
186.610
181.180
167.550
166.710
163.190
155.480
134.830
134.790
111.110
110.970
110.970
104.190
102.630
101.010
99.010
95.550
82.840
80.820
75.230
72.350
67.930
55.990
51.470
51.360
51.050
49.820
47.480
46.330
46.010
39.880
39.210
38.890
36.500
36.200
36.070
35.330
34.550
32.600
0.858
2.547
1.272
0.001
0.161
NA
1.168
NA
0.657
NA
NA
6.943
NA
0.454
0.731
0.253
1.384
0.023
0.361
1.412
0.107
0.835
NA
0.777
NA
0.261
1.5
NA
NA
0.232
NA
NA
0.065
NA
1.001
1.4
NA
NA
0.164
NA
NA
NA
NA
0.437
0.027
0.118
NA
12.548
NA
NA
0.002
NA
10.45
NA
NA
0.116
0.192
0.003
NA
0.849
0
NA
0.396
0.059
NA
1.075
2.369
4.483
8.98
5.033
8515
3.155
5.258
1.874
2.847
1.433
7.164
13.591
1.027
0.97
0.839
3.091
1.857
2.261
71.429
1.85
2.87
4.192
28.391
5.614
6.336
3.67
46.426
5.724
3.311
2.371
6.294
3.169
NA
1.8
3.61
3.409
1.006
1.648
11.678
12.307
2.963
3.15
1.317
12.094
2.338
2.202
5.732
2.771
19.781
4.336
0.874
8.85
15.806
812.5
1.935
5.198
0.877
1.636
1.345
14.07
NA
1.914
3.824
1.062
5.802
8.077
-115.359
NA
-21.459
95.465
-37.379
-37.41
-188.176
39.726
41.303
-183.559
99.483
20.065
21.458
-189.713
226.94
NA
-273.575
NA
-59.672
-14.538
NA
-198.368
-93.811
7.659
26.736
91.814
96.644
18.902
-4.251
77.06
10.629
4.457
0.915
-202.198
32.426
20.168
43.562
93.897
99.356
NA
20.018
-172.627
NA
37.548
-54.256
412.771
83.871
56.676
NA
15.098
-190.987
113.442
NA
23.155
20.297
NA
101.913
-36.681
NA
NA
4.088
14.965
NA
27.74
-7.812
-19.299
-87.26
-14.354
NA
-44.806
-51.402
7.675
-35.154
-49.604
-8.762
NA
-7.644
-12.713
6.017
-16.993
NA
-35.452
20.697
-83.643
-15.611
-54.453
-97.333
-61.994
104.157
156.959
NA
NA
-94.921
-204.506
NA
-33208
1249.84
-69.405
18.958
913.348
-69.16
NA
NA
NA
-36.287
86.758
-2.458
68.862
-76.377
-7.961
27.474
NA
NA
-7.4
37.903
6.314
50.295
NA
189.751
82.478
-8.43
-9.764
45.242
-116.57
2.082
-45.526
-270.824
-27.68
25
STOCKS TO WATCH
Company
Delta Oil & Gas Inc.
Westside Energy Corp.
Basic Earth Science Systems Inc.
Oakridge Energy Inc.
Royale Energy Inc.
CKX Lands Inc.
Petrosearch Energy Corp.
Tidelands Oil & Gas Corp.
Empire Energy Corp.
Maverick Oil and Gas Inc.
Daleco Resources Corp.
GeoResources Inc.
Continental Energy Corp.
Aspen Exploration Corp.
United Heritage Corp.
Tidelands Royalty Trust B
Wescorp Energy Inc.
PRB Energy Inc.
Siberian Energy Group Inc.
Ness Energy International Inc.
Golden Patriot Corp.
United Fuel & Energy Corp.
Petrol Oil and Gas Inc.
Empire Petroleum Corp.
Sonoran Energy Inc.
Texas Vanguard Oil Co.
Surge Global Energy Inc.
Falcon Natural Gas Corp.
Pilgrim Petroleum Corp.
Mexco Energy Corp.
Earth Search Sciences Inc.
New Frontier Energy Inc.
EnDevCo Inc.
Delek Resources Inc.
Trans Energy Inc.
Superior Oil & Gas Co.
New Century Energy Corp.
Beard Co.
Fellows Energy Ltd.
Mesa Offshore Trust
Silver Star Energy Inc.
Miller Petroleum Inc.
Aztec Oil & Gas Inc.
Australian Canadian Oil RT
National Healthcare Technology
PrimeWest Energy Trust
BP Prudhoe Bay Royalty Trust
GSV Inc.
Castleguard Energy Inc.
Double Eagle Holdings Ltd.
Admiral Bay Resources
Allied Resources Inc.
AMG Oil Ltd.
ATP Oil & Gas Corp.
Australian Oil & Gas Corp.
Avalon Oil and Gas Inc.
Avenue Group Inc.
Bayou City Exploration Inc.
BMB Munai Inc.
BPZ Energy Inc.
Calibre Energy Inc.
China North East Petroleum
Colorado Wyoming Reserve Co.
Consolidated Oil & Gas Inc.
Crimson Exploration Inc.
26
Market Cap
($MM)
Debt/Equity
Price/Book
Net Profit Margin
32.000
31.550
31.090
29.440
28.660
26.300
25.510
23.670
23.560
22.700
22.650
22.070
21.130
19.620
19.020
18.850
18.600
18.380
18.190
18.000
16.410
15.570
15.100
14.020
13.500
12.320
12.140
11.900
10.680
10.590
8.940
8.260
7.050
6.870
6.790
6.730
6.160
5.650
5.040
5.040
4.810
4.170
4.100
3.180
1.770
1.540
1.520
1.200
0.870
0.290
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
0.615
NA
NA
0.376
NA
0.297
2.051
0.175
1.301
0.087
0.002
NA
NA
0.448
NA
9.057
2.043
NA
0.056
NA
2.526
3.139
0.266
0.104
0.054
NA
NA
NA
0.014
NA
0.622
NA
NA
4.471
NA
NA
NA
0.777
NA
NA
345.025
0.081
0.217
NA
0.521
NA
0.32
0.26
NA
NA
NA
NA
1.296
1.159
0.032
0.142
0.095
NA
0.001
NA
0.898
NA
12.011
0.094
7.634
1.323
3.088
3.881
1.595
2.791
1.677
4.746
5.455
8.148
1.382
1.947
NA
1.856
1.781
11.93
33.077
1.736
NA
0.952
NA
0.727
1.711
10
0.687
2.087
1.076
NA
NA
1.423
NA
2.099
NA
NA
9.6
NA
NA
NA
0.654
NA
NA
NA
70
3.934
NA
1.275
165.698
0.69
1.064
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
-114.507
-74.988
37.827
-2.089
-16.566
55.795
-194.576
NA
NA
705.917
-92.061
21.088
NA
25.61
-196.35
93.579
NA
-160.838
NA
-151.807
NA
0.843
-76.592
NA
-177.372
21.424
NA
NA
NA
16.83
NA
NA
-133.337
NA
-189.217
NA
-33.315
-65.674
NA
0
-73.588
-67.477
25872.1
NA
NA
42.867
99.539
-31.382
-48.709
NA
NA
26.056
NA
9.568
NA
NA
-263.604
NA
25.301
NA
NA
20.331
NA
-81.84
46.472
-69.262
7.842
89.759
-87.676
31.712
58.166
6.846
-6.919
-42.896
-3.491
-61.47
-307.237
NA
-5.362
299.075
-154.189
10.458
-4.896
-20.074
178.249
-89.69
-22.189
-4.125
-8.804
68.122
-136.938
1.938
56.541
NA
-92.994
16.646
-9.912
4.323
4.078
-6.521
-14.86
0.189
-3.419
9.076
NA
14.563
-548.425
-16.464
-39.564
NA
-5.665
NA
13.192
81.677
-6.548
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
STOCKS TO WATCH
Company
Croff Enterprises Inc.
CrossPoint Energy Co.
Cygnus Oil & Gas Corp.
Discovery Oil Ltd.
Energy XXI
Epic Capital Group Inc.
Evolution Petroleum Corp.
Exxel Energy
FEC Resources Inc.
Fieldpoint Petroleum Corp.
Foothills Resources Inc.
Frontier Energy Corp.
Galaxy Energy Corp.
Geokinetics Inc.
Golden Chief Resources Inc.
Gulf Coast Oil & Gas Inc
Gulfport Energy Corp.
Houston American Energy Corp.
Ignis Petroleum Group Inc.
Index Oil & Gas Inc.
Lions Petroleum Inc.
Lucas Energy Inc.
Majestic Oil & Gas Inc.
Monument Resources Inc.
Morgan Creek Energy Corp.
Mountains West Exploration Inc.
Pangea Petroleum Corp.
ParaFin Corp.
Patch International
Patriot Investment Corp.
PetroHunter Energy Corp.
Platina Energy Group Inc.
Platinum Energy
Pluris Energy Group Inc.
Pyramid Oil Co.
Quest Oil Corp.
Quest Resource Corp.
Radial Energy Inc.
Ram Energy Resources Inc.
Rancher Energy Corp.
Reserve Petroleum Co.
Rocky Mountain Minerals Inc.
Samson Oil & Gas Ltd.
Saratoga Resources Inc.
Smarts Oil & Gas Inc.
South Texas Oil Co.
Standard Energy Corp.
Star Energy Corp.
Sun River Energy Inc.
Sunrise Energy Resources Inc.
Tatonka Oil & Gas Inc.
Terax Energy Inc.
Tesco Corp.
Torrent Energy Corp.
True North Energy Corp.
Universal Energy Corp.
Victory Energy Corp.
Wentworth Energy Inc.
Whittier Energy Corp.
XTX Energy Inc.
Upstream Service Companies
Core Laboratories NV
Todco
Hanover Compressor Co.
Universal Compression Holdings
Market Cap
($MM)
Debt/Equity
Price/Book
Net Profit Margin
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
2.904
2.006
NA
NA
NA
NA
NA
0.268
NA
NA
0.109
1.906
4.852
NA
NA
0.25
NA
NA
NA
NA
1.04
NA
NA
NA
NA
NA
0.036
NA
NA
NA
NA
NA
NA
0.01
0.087
1.62
0.315
NA
NA
NA
0.095
NA
NA
NA
0.017
0.507
2.226
0.639
NA
NA
0.482
NA
NA
NA
0.03
NA
NA
0.619
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
66.681
-72.749
NA
NA
NA
NA
-98.084
NA
NA
35.675
NA
NA
NA
-3.812
NA
NA
52.18
-0.225
NA
NA
NA
27.629
-91.099
-98.411
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
30.768
NA
-60.314
NA
23.185
NA
61.589
NA
NA
11.111
NA
-6.826
NA
-37.586
NA
-13.708
NA
6440.94
NA
NA
NA
NA
NA
NA
15.459
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
1,920
1,890
1,890
1,810
0.563
0.039
1.464
0.985
10.086
3.967
1.939
1.932
15.381
22.905
2.953
10.108
81.296
29.58
-142.067
-78.369
27
STOCKS TO WATCH
Company
Tetra Technologies Inc.
RPC Inc.
Hydril Co.
Global Industries Ltd.
Lone Star Technologies Inc.
Oil States International Inc.
Dril-Quip Inc.
Complete Production Services
W-H Energy Services Inc.
Grey Wolf Inc.
Headwaters Inc.
Cal Dive International Inc.
Parker Drilling Co.
Basic Energy Services Inc.
Hercules Offshore Inc.
Lufkin Industries Inc.
Carbo Ceramics Inc.
InfraSource Services Inc.
Atlas Energy Resources LLC
Griffon Corp.
Gulfmark Offshore Inc.
Ameron International Corp.
Pioneer Drilling Co.
Seitel Inc.
Newpark Resources Inc.
Natco Group Inc.
Layne Christensen Co.
Horizon Offshore Inc.
Willbros Group Inc.
Trico Marine Services Inc.
Gulf Island Fabrication Inc.
Superior Well Services Inc.
Flow International Corp.
Matrix Service Co.
Bronco Drilling Co. Inc.
Universal Compression Partners
North American Energy Partners
Union Drilling Inc.
Dawson Geophysical Co.
Natural Gas Services Group Inc.
Boots & Coots International
TGC Industries Inc.
Particle Drilling Technologies
Omni Energy Services Corp.
Mitcham Industries Inc.
Hyperdynamics Corp.
Unicorp Inc.
EnerNorth Industries Inc.
Calumet Specialty Products
Alon USA Energy Inc.
Giant Industries Inc.
Atwood Oceanics Inc.
Atlas America Inc.
Forster Tool & Supply Inc.
EGPI Firecreek Inc.
Caspian Services Inc.
Blast Energy Services Inc.
Market Cap
($MM)
Debt/Equity
Price/Book
Net Profit Margin
1,640
1,550
1,540
1,520
1,420
1,400
1,390
1,300
1,280
1,250
1,050
1,010
888.340
884.930
883.990
877.510
872.710
860.230
779.640
767.690
694.360
669.490
592.250
562.090
560.740
525.410
505.880
495.320
484.740
472.310
464.060
452.240
414.870
392.350
349.160
336.360
292.960
274.690
240.400
160.020
133.510
124.140
118.570
118.450
112.450
102.940
33.270
1.500
1.210
1.210
1.070
NA
NA
NA
NA
NA
NA
0.754
0.022
NA
0.111
NA
0.504
0.009
0.761
0.327
0.556
0.743
NA
0.788
0.777
0.296
NA
NA
0.214
NA
0.527
0.584
0.284
NA
7.701
0.606
0.026
0.667
0.423
1.934
0.058
NA
0.087
0.128
0.163
0.199
NA
2.707
0.24
NA
0.196
1.027
0.266
0.054
1.547
0.051
0.237
0.015
0.182
0.151
1.85
0.57
0.139
2.5
0.322
NA
0.068
0.883
4.168
4.984
4.56
2.298
1.919
1.741
3.283
1.923
2.797
2.524
1.299
3.707
2.092
2.354
2.471
2.828
2.645
2.619
NA
1.863
1.684
1.983
1.536
22.911
1.538
3.3
2.577
1.763
4.781
1.649
2.367
3.928
7.51
4.025
1.081
0.254
10.425
1.739
2.016
1.623
4.018
3.762
24.78
4.225
1.899
18.305
7.347
0.483
3.684
4.39
2.21
NA
NA
NA
NA
NA
NA
13.515
18.656
16.764
20.093
4.939
10.439
19.88
12.495
13.187
22.767
10.157
22.632
12.698
14.046
30.53
10.953
17.378
3.914
NA
3.819
52.554
12.847
21.967
30.233
-1.331
7.114
4.177
14.517
-17.615
26.437
11.576
13.931
10.476
4.853
21.807
33.581
-3.657
14.095
9.639
13.8
11.908
7.502
NA
24.614
30.319
NA
-242.264
NA
8.021
3.736
3.777
28.33
-10.427
-227.399
NA
-15.566
NA
53.688
507.559
24.771
43.654
-60.711
-339.653
71.829
156.821
-692.396
36.428
27.749
16.176
-11.035
58.918
-232.369
54.347
-43.023
NA
NA
-37.207
-137.382
NA
-107.372
60.604
-186.518
61.141
-95.516
-34.687
-77.037
22.309
-54.485
253.8
-34.029
638.88
-64.731
NA
59.546
-60.924
65.313
-25.737
72.127
-52.355
-52.513
-13.87
-30.328
57.091
-14.77
-1.919
-25.637
3.382
-13.828
NA
NA
NA
NA
NA
NA
Data as of 1-12-07. Source: Yahoo!, other
28
Patriot
P/U 1/07 OGI
pg. 46

small-cap selectivity - Oil and Gas Investor

Transcription

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